Mindless on ‘reform’

Reforms in India have become synonymous with opening up to foreign capital. Does it reform our corrupt polity or institutions?

By Latha Jishnu
Last Updated: Sunday 28 June 2015

Reforms in India have become synonymous with opening up to foreign capital. Does it reform our corrupt polity or institutions?

Why is there so much drivel written and said about reforms in India? It’s not just opportunistic politicians who beat the reform drum—or still it—when it’s expedient. Economists, bureaucrats and all hold forth on the need for reforms and why the lack of it is holding back our economic growth. Then there is the media which goes into excess of headlines, pontification and downright inanity on the issues of reforms. And it’s not just the pink press that goes into raptures; every mainstream newspaper, including staid dailies given to protecting secular values, is prone to see reforms where none clearly exist.

Remember the media’s last feeding frenzy on reforms? There was absolute hysteria in September when the government decided to open up multi-brand retail and civil aviation to varying degrees of foreign direct investment (FDI). There were huge headlines, tedious analyses and foolhardy projections on the impact of these measures on growth. This was repeated but more mutedly in October when Manmohan Singh’s muddled and unpredictable Cabinet lifted the cap on FDI in insurance companies and opened the pension sector to foreign investors for the first time.

All this we are given to understand is reforms. Just what the good doctor thinks is needed for an ailing economy. Not that Manmohan Singh, economist that he is, is calling it reforms. Very prudently he terms it “some important economic policy decisions”. That was how he described the September gamble in his address to the nation where he attempted to justify the FDI liberalisation as part of “the responsibility of the government to defend the national interest, and protect the long-term future of our people”. It was pretty difficult to get the logic of this spiel specially since lack of FDI has not been our problem. In fact, FDI inflows spiked to a record $46.8 billion in 2011-12, increasing by over a third from the previous year. The previous years, too, have seen such funds increase. Did anyone raise this point?

The rest of the prime minister’s justifications made as little sense. Rapid growth, he said, is necessary to raise revenues to finance programmes in education, health care, housing and rural employment. So whatever happened to education, health care and housing and rural employment during the boom years of our economic growth? Anyone interested? As soon as the “reform” euphoria had worn off newspapers were back to reporting their staple fare: scams related to every kind of natural resource misappropriation and political scandals of the worst kind involving sleaze money that businessmen have paid politicians of every hue. Crony capitalism and the collusive corruption of politicians, businessmen, bureaucrats and the media joining to make the most of a free market economy was fully revealed by the Niira Radia tapes last year. The scandals tumbling out thick and fast are egregious examples of the same malaise. Surely, we all recognise what needs to be reformed urgently? Is it an economy that is already flush with funds?


A clue to what reforms entail comes from Manmohan Singh himself. At a recent conference of the Central Bureau of Investigation and state anti-corruption bureaus, the prime minister did nothing to put these institutions which have a far from an unsullied reputation on their toes. Instead, he bewailed the “mindless atmosphere of negativity and pessimism that is sought to be created over the issue of corruption”. Instead of doing us no good, “it can only damage our nation’s image and hit at the morale of the executive.”

But what is interesting is his analysis of the nature of corruption that is choking the country. I will, therefore, reproduce his speech at some length so that his reasoning becomes clear. “The nature of the challenges that our country’s anti-corruption agencies face varies with the level of economic development,” he says. “These challenges get even more complicated if the pace of economic development is rapid, as it has been in our country in the last two decades or so... The economic reforms initiated in the early 1990s greatly reduced many of the old forms of corrupt practices, associated with controls and the license-permit raj. They resulted in faster economic growth and new areas of economic activity. This in turn led to newer opportunities for corruption, ones associated with specialisation and expansion of our economy. As our economy grows and becomes more integrated with the evolving global economy, the big challenge before our anti-corruption agencies is to keep pace with these rapid developments.”

Manmohan Singh was the finance minister who initiated the economic reforms of the 1990s, mainly to set right what he called the structural faults of the Indian economy. So is this unprecedented corruption the price that is paid even if the structural faults have not been corrected? And a price that the country’s hapless people will continue to pay while the crony capitalists make a killing?

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  • A country which is not

    A country which is not developing as fast as other countries expect means only one thing: their natural resources are not being depleted as fast as other countries. The people living there are wise enough to store as much resources as possible for their coming generations. This is what happens in India. Indian mothers are notoriously famous for eating too little to survive and setting aside almost all they cook for their children. India lives in her thousands of villages, not in the great cities. In this aspect Gandhi was absolutely right and his belief that what industrialization needed for India is the production of articles needed for the people of these villages is right and justifiable. Agriculture and rural industries were what he emphasized as the way to the progress of India. What industries he envisioned did not need the support of large infrastructure, would not have needed large investment and would have eradicated unemployment in the villages. But the steps of India faltered when the socialist Nehru, under the inspiration and influence of the Soviet Union, decided to turn to heavy industries as the pathway to Indian economic progress. He did not live long enough to see the soviet economics collapsing in their own Russia. Neither did he envision his successors in the party and in the administration selling out these state-owned heavy industries to private rich men and these private rich men selling out India to the world corporates. It was foolish of India, who was once noted for the export of tea, cotton and steel, to converge on software outsourcing which flopped when the main customers in Europe and America dropped in business as each wave of share price downfall struck. Large numbers of students were encouraged to study these things which never have a domestic demand and they did get great salaries inconceivably high in Indian standards for a time. But when the tide collapsed and their income shrank, being unable and untrained to cope with such sudden set backs in career, many of these bright students became preys to depressive moods and eventually many became psychiatrically disturbed. Marriages collapsed and hospitalizations increased. None has ever studied the impact on software employees of this phenomenon of getting prestigious jobs and huge salaries for a time and suddenly falling from this fine financial position to nothingness. No notable products were turned out by the Indian software industry and many Indian software companies lost their contracts through sloppy work. India has never wished to become a super power, and they have never wished to have a higher growth rate, except those politicians who wished to have a place for them amongst the worldÔÇÖs national leaders.

    Posted by: Anonymous | 7 years ago | Reply
  • Indian economy has brief and

    Indian economy has brief and intermittent periods of growth and going back. The growth periods would be periods of liberalization or other economic reforms. During these growth periods the persons closely associated with this growth amass great fortunes of their own and disappear or they continue to be in the administration for a few more years. When things begin to come out exposing them, the economy reverts to its former position of stillness. But within that time a considerable portion of national wealth would have reached Switzerland, the Kay Islands or the Bahamas. Therefore, paradoxically, it is wise for India to have no such periods of growth. IndiaÔÇÖs money and IndiaÔÇÖs resources would stay in India by not growing this way. No economic growth of India has ever stayed with the people or has advanced the countryÔÇÖs economy at least through a decade. There is no dearth of economic planners in India. The simple way the Indian authorities find to escape from the allegation of too many people remaining below the poverty line there is to draw the line further below 23 rupees per day and move others to the ÔÇÿabove poverty lineÔÇÖ. It is that simple. And this discovery of an Indian family living well with 23 rupees per day having the middle class status was made by the Planning Commission of India whose members live in delusion and who spend 23 lakh rupees for renovating just three lavatories in their headquarters! They roam the world capitals for gathering information and holding discussions on how to plan India! How much far can an Indian official go to live with peopleÔÇÖs money and cheat the nation? This Commission is the finest example. What planning did they do in all these years? It is they who planned tele-conferencing for overall co-ordination of development. Why donÔÇÖt they themselves tele-confer instead of touring the world? There is this story of an ancient Indian prime minister who served Chandragupta Maurya. His name was Chaanakya who was the person who discovered Chandragupta from anonymity, trained him in war techniques, enabled him to defeat his co-brother and emperor Nandagupta and become himself an emperor. It was him who formulated the laws and rules for administering a model nation which later became famous in history as Chaanakya Rules. This prime minister lived on the outskirts of the city in a hovel. One night the emperor visited him to seek advice on some national matter. No sooner he mentioned a matter concerning the administration of the country than Chaanakya put out the oil lamp he was burning and lighted another. His student, the emperor, asked him why he used two lamps. The prime ministerÔÇÖs answer was that one was for his domestic uses and the other was for conducting national business. Oil to be used for discussions on the nationÔÇÖs administration shall not be used for personal discussions! That was India before 2500 years and the Mauryas planned and ran their nation well.

    Posted by: Anonymous | 7 years ago | Reply
  • Life of the common man in

    Life of the common man in India has not changed much except the arrival of television and mobile phone in their lives. The new liberal economic policies brought out by Narasimha Rao and then by Manmohan Singh have only affected the middle class and the low income Indian citizens adversely. Only a few rich and privileged have had any benefits out of this liberalization in economy. Many people lost their jobs, especially those day labourers who work in the fields as a result of economy changing to stressing and emphasizing rather on industrialization than on farming. A great number of people lost their lands and homes after being acquired for industrialization, which then were either sold by the recipients to real estate millionaires or were simply kept unused and idle, making void the promised jobs. When car sales increased and car making industry flourished, authorities began to acquire more land for building new roads and widening the existing ones. Thus millions more of people lost and loose each day their homes and lands and occupations. What justification is there in uprooting millions of families and shattering their lives by offering some money or substitute lands? What is the price for unstabilizing the life of a family for years? Why are the PresidentÔÇÖs house, the Prime MinisterÔÇÖs house and the ministersÔÇÖ houses in the states continuing in one place? Constructing express ways became a national policy and priority. Who would want to travel fast except the immensely rich? The clerks, typists and stenographers in ten thousands lost their jobs due to automation in office administration which neither facilitated transparency in administration nor eliminated corruption. In fact, corruption only increased a 10000 fold since automation was introduced, because the number of people who can know about what is happening in a particular government deal was reduced to some two or three people. It is not illogical to doubt that whether this total computerization instead of keeping proper paper records were not introduced for easing corruption. Environmental degradation was another result of Narasimha RaoÔÇÖs and Manmohan SinghÔÇÖs opening up policy. And, during a period of just ten years, India lost resources which would have sustained the nation through another 1000 years. The so-called experts are crying aloud that Indian development has not enough speed. Speed for what, filling the pockets?

    Posted by: Anonymous | 7 years ago | Reply